Dealing with divorce is complicated enough, but having to deal with dividing debts makes it considerably more difficult. How a couple’s debt is divided depends on a number of different factors.
In California, the community is liable for all debts that were incurred during the marriage, regardless of which partner actually incurred the debt and whether this debt benefitted the family or the individual. Both parties are thus equally liable for the debt, and this debt should be divided evenly when settlements are being discussed unless the parties come to some other agreement. For example, one spouse may agree to pay off the joint debts in exchange for a greater share of the community property. A spouse may be inclined to do this because it will ensure that he or she is not responsible to the creditors.
Couples often face issues when one party has been off the other’s pre-marital debts. Oftentimes, a couple is married and one spouse has a great amount of pre-marital debt that the other spouse agrees to help pay off. In this case, the couple has used community property to pay off a separate debt. If either party files for dissolution of the marriage, California case law states that the community is entitled to reimbursement for the amount it paid to discharge one party’s separate property.
Debt that occurs after a couple has separated can be a more complex affair. If there is no court order or written agreement established in the separation that outlines payment of the debts incurred, then those debts that are deemed “necessaries,” will be confirmed to either spouse according to their respective needs and abilities to pay at the time the debt was incurred. Debts incurred by either spouse for things deemed “non-necessaries,” of that spouse or children of the marriage for whom support may be ordered shall be confirmed without offset to the spouse who incurred the debt.
Divorce can be a difficult process and dealing with debts incurred during the marriage and afterwards can be hard to navigate. It’s a smart idea to consult a California attorney who can provide guidance about how debts incurred during a marriage are likely to be divided by the court.
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